International Antitrust Law & Policy: Fordham Corporate Law 2001 - Hardcover
International Antitrust Law & Policy: Fordham Corporate Law 2001 - PDF
___________________________________________________________________________________
Preview Page
Chapter 12
OLIGOPOLIES AND JOINT DOMINANCE
IN COMMUNITY ANTITRUST LAW
John Temple Lang†
The researches of many commentators
have already thrown much darkness on this subject,
and it is probable that if they continue we shall soon know nothing at all about
it.
– Mark Twain
I. SUMMARY
This paper considers the European Community antitrust law on oligopolies
and joint dominance to see how far it makes a clear and coherent policy
under what are now Articles 81 and 82 and the Merger Regulation. As this
paper is long and the questions discussed in it are interrelated, a summary is
useful.
Joint dominance means absence of effective competition, both for the
purposes of Article 82 (on abuse of joint dominant positions) and the Merger
Regulation (which prohibits creation or strengthening of a joint dominant
position). This means that there is no effective competition either between
the supposed oligopolists themselves, or between them and other companies
in the market. The effectiveness of competition between the supposed
oligopolists and other companies in the market is assessed substantially in
the same way as in cases of dominance of a single company.
Competition between the supposed oligopolists themselves may be
ineffective as a result of shareholding or contractual or other links between
them. These links, however, are not necessary for joint dominance: competition
may be ineffective due only to characteristics of the market. The
characteristics that lead to this result are primarily concentrated supply (less
than five producers), product homogeneity, price transparency and stable
market conditions. In markets in which these features are pronounced
enough, each company knows that it can gain little from reducing its price
(because its rivals will at once do the same), and that it would make lower
profits until they all raised their prices subsequently. A series of other
Cleary, Gottlieb, Steen and Hamilton, Brussels; Professor, Trinity College,
Dublin; Senior Visiting Research Fellow, Oxford. I am grateful to Paul Marquardt and
Robert O’Donoghue of Cleary, Gottlieb, Steen and Hamilton, Brussels for many
valuable comments on this paper.